The administrator, executor, or beneficiary must: File a final tax return.
If the deceased had not filed individual income tax returns for the years prior to the year of their death, you may have to file. It's your responsibility to pay any balance due and to submit a claim if there's a refund.
Financial documents vary in importance and the recommended time to keep them. It is suggested to keep tax returns and tax related documents for at least seven years[1] after someone's death.
Generally, beneficiaries do not pay income tax on money or property that they inherit, but there are exceptions for retirement accounts, life insurance proceeds, and savings bond interest. Money inherited from a 401(k), 403(b), or IRA is taxable if that money was tax deductible when it was contributed.
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
If you are a beneficiary of property or income from the estate, you could be impacted on your federal income tax return. You must report any income you receive passed through from the estate to you and reported on a Schedule K-1 (1041) on your income tax return.
Typically, you're advised to keep financial statements for three to seven years. This provides an appropriate amount of time necessary to settle a deceased person's estate, address possible legal or financial obligations, resolving disputes, and filing tax returns.
Generally, the IRS or relevant tax authority can only claim unpaid taxes through the deceased's estate. If the person dies without assets, the taxes may go unpaid. Tax laws vary depending on the circumstances, so it's always advisable to seek professional advice.
6 years - If you don't report income that you should have reported, and it's more than 25% of the gross income shown on the return, or it's attributable to foreign financial assets and is more than $5,000, the time to assess tax is 6 years from the date you filed the return.
The IRS doesn't need a copy of the death certificate or other proof of death.
Funeral expenses aren't tax deductible for individuals, and they're only tax exempt for some estates. Estates worth $11.58 million or more need to file federal tax returns, and only 13 states require them. For this reason, most can't claim tax deductions.
If you don't file taxes for a deceased person, the IRS can take legal action by placing a federal lien against the Estate. This essentially means you must pay the federal taxes before closing any other debts or accounts. If not, the IRS can demand the taxes be paid by the legal representative of the deceased.
Widows often receive less income but will be pushed to higher tax brackets. In addition to higher tax rates, widows lose half the standard deduction as a single filer, increasing their tax bill as a result.
How long do you have to report a death to Social Security? You have up to two years to after the date to death to report a death to Social Security in order for an eligible spouse or child to receive benefits.
The personal representative of an estate is an executor, administrator, or anyone else in charge of the decedent's property. The personal representative is responsible for filing any final individual income tax return(s) and the estate tax return of the decedent when due.
So, while beneficiaries don't inherit unpaid tax bills, those bills, must be settled before any money is disbursed to beneficiaries from the estate. Not only that, but the IRS is persistent. It can pursue estate tax liability for 10 years, according to the Collection Statute Expiration Date (CSED).
Generally, you must file the return within nine months of the date of death. It's up to you to ensure that this obligation is met. What happens if you fail to file the return on time? The estate could be hit with interest and penalties on top of any federal estate tax that's due.
Beneficiary Rights and Accounting
According to California Probate Code section 10950, if more than a year has passed since the beginning of probate administration and an accounting has not been filed, interested parties are entitled to file a petition with the court to make the executor to complete an accounting.
Banks freeze access to deceased accounts, such as savings or checking accounts, pending direction from an authorized court. Banks generally cannot close a deceased account until after the person's estate has gone through probate or has otherwise settled.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.
While it is often beneficial to communicate with beneficiaries regarding the estate administration, executors are not required to comply with every single request for information. Beneficiaries are often surprised to discover that in reality they have a right to very little information regarding an estate.
If an estate is insolvent, a determined creditor can go after assets that didn't pass through probate but were inherited by beneficiary designation. So, if the decedent had a bank account with a “pay on death” designation, the IRS or other creditors could go after those assets.